The correlation between cryptocurrencies and the US stock market has undergone a qualitative reversal. In the first half of the year, the rapid surge in the crypto market acted as a strong boost, greatly enhancing the risk appetite for the global technology sector. However, by the end of the year, this correlation revealed a sinister side.

When the crypto market experiences a sharp decline due to leverage liquidations, this panic quickly spreads to the traditional stock market. Institutions, in order to cover margin calls, have to sell more liquid stock assets, creating a vicious cycle of “crypto decline → selling US stocks → escalating panic.”